By Phebe Hong
It happens every year like clockwork: Apple releases a new iPhone, and then hordes of people rush to buy it, despite still owning perfectly functional older models. We’re willing to shell out hundreds of dollars for a few extra camera features and new colors. As a result, Apple profits. A similar phenomenon is occurring in the drug industry, but with less consumer choice and more dire consequences.
“Product hopping” in the drug industry occurs when a pharmaceutical manufacturer winds down production of an old drug formulation whose patent expiration date has passed or is approaching. The company then forces or persuades patients to switch prescriptions to the drug’s new – and newly patented – formulation. A successful “product hop” extends a pharmaceutical manufacturer’s monopoly and therefore its ability to charge high prices.